Question

33. P and Q were partners sharing profits and losses in the ratio of 3 : 2. They
decided that with effect from 1st January, 2019 they would share profits and
losses in the ratio of 5 : 3. Goodwill is valued at $1,28,000. In adjustment
entry :
(A) Cr. P by 3,200; Dr. Q by 3,200
(B) Cr. P by 337,000; Dr. O by 337,000
(C) Dr. P by 337,000; Cr. O by 37,000
(D) Dr. P by 3,200 Cr. O by * 3,200

Answer 1

Answer:

(A) Cr. P by 3,200; Dr. Q bh 3,200

Explanation:

old ratio of p and q = 3:2

5

new ratio of p and q = 5:3

8

old ratio - new ratio = gaining / sacrificing Ratio of partners

1. P = 3 - 5 = (-) 1 (gain)

5 8 40

p gains by 1

40

2. Q = 2 -3 = 1 (sacrifice)

5 8 40

q sacrifices by 1

40

premium of goodwill

p = 128000 ×(-) 1 = 3200 (debit)

40

q = 128000 × 1 = 3200 (credit)

40